Inductive reasoning about unawareness

Simon Grant, John Quiggin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

40 Citations (Scopus)

Abstract

We develop a model of games with awareness that allows for differential levels of awareness. We show that, for the standard modal-logical interpretations of belief and awareness, a player cannot believe there exist propositions of which he is unaware. Nevertheless, we argue that a boundedly rational individual may regard the possibility that there exist propositions of which she is unaware as being supported by inductive reasoning, based on past experience and consideration of the limited awareness of others. In this paper, we provide a formal representation of inductive reasoning in the context of a dynamic game with differential awareness. We show that, given differential awareness over time and between players, individuals can derive inductive support for propositions expressing their own unawareness. We consider the ecological rationality of heuristics to guide decisions in problems involving differential awareness.

Original languageEnglish
Pages (from-to)717-755
Number of pages39
JournalEconomic Theory
Volume54
Issue number3
DOIs
Publication statusPublished - Nov 2013
Externally publishedYes

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